3 Big Things Today, Oct. 20
Corn, Soybeans Rise as Yields Disappoint
Corn and soybeans gained overnight on speculation that the U.S. crop isn’t as good as some had hoped.
The corn harvest was 59% complete as of Sunday while 77% of soybeans were collected, both within analyst expectations.
Yields early in the season in southern states were disappointing, but were expected by growers, analysts and traders to improve as the harvest moved north. While yields have improved slightly from those early numbers, they’re not as good as some had forecast.
With the harvest almost finished, growers aren’t expecting to reach last year’s record 171 bushels an acre, and some won’t get close to this year’s 168.8 bushels an acre forecast by the U.S. Department of Agriculture.
Soybean yields also were a record last year at 47.5 bushels an acre. This year, they’re pegged at 47.2 bushels an acre by the government. While they’re not terrible, yields likely will end up below the USDA’s estimate.
One participant in agriculture.com’s Marketing Talk said the corn crop was “not too pretty” and expected maybe 155 bushels an acre, and soybeans at 45 bushels an acre. (http://community.agriculture.com/t5/Marketing/Floor-Talk-October-19/td-p/610080)
Corn futures for December delivery gained 1 ½ cents to $3.74 ½ a bushel overnight on the Chicago Board of Trade.
November soybean futures rose 3 ¼ cents to $8.94 ¼ a bushel overnight in Chicago. December soymeal futures gained 1.40 cents to $312.30 per short ton. December soyoil futures added 0.12 cent to 28.26 cents a pound.
Wheat for December delivery rose 2 ½ cents to $4.88 ¼ a bushel on the CBOT.
What Happened to Wheat?
Wheat futures on the CBOT that rose and rose in the past month, topping a high of $5.30 a bushel earlier this month have declined almost 10% since.
So what happened? Rain happened.
Precipitation in major grower regions including the Black Sea and Australia, both U.S. rivals in terms of wheat exports, the past two weeks has helped improve prospects for crops in growing areas.
And it looks like the price action could get worse as showers this week are expected to improve soil moisture in much of the Black Sea region, including Ukraine and Russia, favoring wheat establishment, according to Donald Keeney, a senior agricultural meteorologist at MDA Weather Services.
U.S. growers also have gotten a bit of rain in the past month. Precipitation has fallen in parts of the Texas and Oklahoma panhandles, along with some counties in western Kansas. There are still areas that remain extremely dry in the southern Plains, but the situation looks to have improved for some growers in the region. About 76% of the U.S. crop was planted as of Sunday, on par with the prior five-year average, and half was emerged.
While rain is always a good thing for farmers, especially for winter wheat growers in the southern Plains who sometimes go months without precipitation, it may not be so great for the bulls in Chicago.
Rain in southern Plains Will Improve Winter Wheat Prospects
The rainfall in the southern Plains isn’t supposed to stop anytime soon. In fact, as much as 4 inches is expected to fall this week alone, according to the National Weather Service. (www.weather.gov)
That’s prompted the agency to issue a warning for a stretch of land from Hereford, Texas, to Guymon, Oklahoma – in their respective states’ panhandles – telling residents to watch for flash floods.
The rain will “significantly improve soil moisture supplies across central and western areas, which will favor wheat establishment,” MDA Weather’s Keeney said in a morning report.
The forecast for the U.S. Midwest is calling for more of the same – dry, cool weather – that will continue to allow farmers to harvest at breakneck speed. (http://www.agriculture.com/weather)
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